Disposed

Fida Ashraf. K v. State Bank of India

Kerala HC1 Mar 2021WP(C)/1335/2021

Case brief

AI extract

What is this about?

Petitioner, an MBBS student, sought educational loan rejection due to father's poor CIBIL score. Court held that poor CIBIL cannot deny loans to meritorious students, directing banks to reconsider based on student's earning capacity and scheme objectives.

What did the court decide?

Respondents directed to reconsider and process loan application within two weeks of receiving judgment copy.

Fida Ashraf. K Vs State Bank of India — Consumer Protection | Kerala HC (2021)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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MONDAY, THE 01ST DAY OF MARCH 2021 / 10TH PHALGUNA, 1942

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WP(C).No.1335 OF 2021(N)

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PETITIONER:

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FIDA ASHRAF. K AGED 21 YEARS D/O. ASHRAF.K. KODAMBATTIL (HOUSE), OZHUKKARA, MAYANADU (POST), KOZHIKODE DISTRICT, PIN-673 008. MBBS STUDENT (SECOND YEAR), AL-AZHAR MEDICAL COLLEGE AND SUPER SPECIALTY HOSPITAL, EZHALLOOR (POST) THODUPUZHA, IDUKKI 685 605.

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BY ADV. SRI.JESWIN P.VARGHESE

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RESPONDENTS:

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1 STATE BANK OF INDIA REPRESENTED BY THE REGIONAL MANAGER, FRANCIS ROAD, KOZHIKODE 673 001.

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2 THE BRANCH MANAGER, STATE BANK OF INDIA, MEDICAL COLLEGE BRANCH, MEDICAL COLLEGE (POST), KOZHIKODE 695 001.

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3 THE PRINCIPAL, AL-AZHAR MEDICAL COLLEGE AND SUPER SPECIALTY HOSPITAL, EZHALLOOR (POST) THODUPUZHA, 685 605.

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BY ADV. SRI.G.G.MANOJ BY ADV. SRI.S.SARATH PRASAD

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THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 01.03.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No.1335 OF 2021(N)

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J U D G M E N T

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Petitioner, who is a second year MBBS Student,

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is aggrieved by the rejection of her application for educational loan.

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It is stated that the petitioner passed SSLC as well as the Higher Secondary Examination with very high marks with A+ Grade in all the subjects and obtained admission for MBBS in the State merit quota in the 3^rd respondent College. As the petitioner's

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family found it difficult to remit the fee for the MBBS course, she submitted Ext.P6 application for educational loan, with her father as the coapplicant. In the application property in the name of her father having an extent of 6.070 Ares along with the residential house was offered as security. However the second respondent did not take any positive action though it was assured that it would be processed and loan would be sanctioned. The

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petitioner points out that it is only because of Ext.P9 proceedings before the Munsiff Court in execution proceedings in PLP No.21001 of 2016 that the respondents did not sanction the loan. It is stated that the said proceedings relates to a case where her father stood as a guarantor for a loan availed by one Smt. Jeeja from Kerala Gramin Bank and that cannot be a relevant factor or reason for denial of educational loan.

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Learned Standing Counsel appearing for

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respondents 1 and 2 have filed a statement. It is stated that on examining the application submitted by the petitioner it was found that the CIBIL score of petitioner's father, who is the co-applicant, was reflected as “Suit filed (Wilful Default)”. Relying on Annexure R1(1) Circular issued by the State Bank of India it is stated that “if the account Status for a secured loan/unsecured loan/credit card is (i)Suit Filed, (ii) Wilful default (iii) Suit filed

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WP(C).No.1335 OF 2021(N)

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(Wilful Default), (iv) Suit Filed & Written-off, (v)

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Wilful default & written off or (vi) Suit Filed (wilful default) and written off, the applicant's proposal may be rejected. While considering the application of the petitioner it was found that father of the petitioner was a CIBIL defaulter on his account status as it was shown as Suit Filed (Wilful Default) and therefore the application was rejected.

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Learned counsel for the petitioner relied on the judgments of this Court in W.P.(C).No.24763 of 2020, 26953 of 2015 and W.A.No.2325 of 2015 in support of his contention that the respondent Bank instead of denying the educational loan arbitrarily, ought to have sanctioned the same.

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Having heard the contentions on either side it is seen that the only ground for not considering the application for loan in her favour is the account status of the petitioner's father on the basis of

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Ext.P9 where petitioner's father stood as a

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WP(C).No.1335 OF 2021(N)

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guarantor. This Court has in a series of judgments including W.P.(C).Nos.19248 of 2019, 10968 of 2020, W.A.No.2325 of 2015, etc., held that poor CIBIL score cannot be a ground for denying educational loan to a meritorious student. As held in those cases and also in the judgment in W.P.(C) No.24763 of 2020, the criteria based on which the education loan is to be sanctioned should be the possible earning capacity of the student depending upon the course which she/he is pursuing.

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Ext.P5 scheme for educational loan was floated by the Indian Bank Association in tune with the policy decision of the Central Government and in tune with the guidelines of the Reserve bank of India for the very purpose of providing financial support from the banking system to meritorious students for pursuing higher education in India and aboard. In Clause 2 of Ext.P5 Scheme emphasis is given to see that a meritorious student is not loosing the

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WP(C).No.1335 OF 2021(N)

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opportunity to pursue higher education for lack of financial support. Therefore the Circular Annexure R1(1) cannot override the provisions contained in the Model Education Loan Scheme.

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In the present case petitioner is a student who got admission to MBBS in the State of Kerala itself and there cannot be any scope for any doubt regarding the earning capacity of a student who passes MBBS. It is clear from the statement filed by the respondents that they have not considered the application of the petitioner in tune with the objects and purposes for which Ext.P4 educational loan scheme has been floated. Respondents ought to have seen that petitioner, who is a second year student, is not loosing her opportunity to continue and undergo her studies on account of their inaction on her application. When petitioner has stated that 6.070 Ares of land in the name of her father has already been offered as security, respondents ought

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to have considered the same before rejecting the application (though no orders of rejection are issued.)

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Respondents 1 and 2 shall therefore reconsider

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and process the application of the petitioner having regard to the purpose for which educational loan has been floated and to take appropriate action on her application for sanctioning the loan within a period of 'two weeks' from the date of receipt of a copy of the judgment.

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The writ petition is disposed of accordingly.

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Sd/- P.V.ASHA, JUDGE

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APPENDIX

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PETITIONER'S EXHIBITS:

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EXHIBIT	P1 A TRUE COPY OF PETITIONER'S SSLC CERTIFICATE DATED 20.04.2015.
EXHIBIT	P2 A TRUE COPY OF PETITIONER'S PLUS TWO CERTIFICATE NO. HSE-2/2017/276357 DATED 15.05.2017.
EXHIBIT	P3 A TRUE COPY OF ALLOTMENT MEMO FOR MBBS COURSE ISSUED TO THE WRIT PETITIONER DATED 08.07.2019.
EXHIBIT	P4 A TRUE COPY OF BONA FIDE CERTIFICATE ISSUED TO PETITIONER BY THE 3RD RESPONDENT DATED 13.10.2020.
EXHIBIT	P5 A TRUE COPY OF MODEL EDUCATIONAL LOAN SCHEME PUBLISHED BY INDIAN BANK'S ASSOCIATION.
EXHIBIT	P6 A TRUE COPY OF APPLICATION FOR EDUCATIONAL LOAN SUBMITTED BY THE PETITIONER DATED 24.12.2020.
EXHIBIT	P7 A TRUE COPY OF LAND TAX RECEIPT FOR 6.070 ARES OF LAND BELONGS TO PETITIONER'S FATHER DATED 21.7.2020.
EXHIBIT	P8 A TRUE COPY OF THE AFFIDAVIT SWORN JOINTLY BY THE PETITIONER AND HER FATHER DATED 16.10.2020.
EXHIBIT	P9 A TRUE COPY OF E.P. NO. 124/17 IN P.L.P. NO. 21001/2016 BEFORE PRINCIPAL MUNSIFF COURT, KOZHIKODE.

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RESPONDENTS' EXHIBITS:

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ANN.R1(1) A TRUE COPY OF E-CIRCULAR ISSUED BY THE STATE BANK OF INDIA DEPARTMENT PBU PERSONAL LOANS DATED 17.01.2018, VIDE E-CIRCULAR NUMBER NBG/PBU/PLEDUCATION/56/2017-18.

Fida Ashraf. K v. State Bank of India

Case brief

What is this about?

What did the court decide?

Fida Ashraf. K v. State Bank of India

Case brief

What is this about?

What did the court decide?

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